Saturday, January 9, 2010

World Financial Report, Jan 8, 2010

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Dollar Falls, Treasuries Advance After U.S. Employers Cut Jobs

The U.S. dollar fell and Treasuries rose after American employers unexpectedly eliminated jobs last month, spurring concern the economic recovery will falter. U.S. stocks rallied on optimism about corporate profits.

The Dollar Index, a gauge of the U.S. currency versus those of six major trading partners, declined 0.6 percent to 77.485 at 5:13 p.m. in New York. Treasury two-year notes advanced, driving their yield down 0.05 percentage point to 0.97 percent. The Standard & Poor’s 500 Index added 0.3 percent, recovering from a 0.5 percent drop, as United Parcel Service Inc. said profit beat its forecast and Alcoa Inc. climbed to the highest price since October 2008 before reporting quarterly results on Jan. 11. (more)

Consumer Credit in U.S. Drops Record $17.5 Billion in November

Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.

The slump in credit to $2.46 trillion was more than anticipated and followed a revised $4.2 billion drop in October, Federal Reserve figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease of $5 billion. The figures track credit card debt and non-revolving loans, such as those to buy autos.

A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery. (more)

Platinum rush sweeps across China, India

A recent Hollywood function was an eye opener for many commodity investors across the world. Till recently they have been advised by their brokers that the recession was looming and so it was better to invest in gold as a safe haven. But, the 2010 People’s Choice Awards function provided a clear indication to the investors where the world is heading for.

Almost all the big names in Hollywood like Sandra Bullock came wearing platinum at the kick off of the 2010 awards show season.

At the 2010 People’s Choice Awards classic jewellery designs prevailed, including diamond line bracelets and diamond and platinum stud earrings. However, the domineering colour was the while shade of platinum. (more)


2010, a year of the Tiger for the Chinese starts with accentuated 'Asian decoupling' relative to OECD countries, where slow economic recovery from the 2008-2009 recession is presently the norm. Further into 2010 this may change, becoming inflation-pulled economic growth for the OECD group, with serious risks of 'interest rate medicine' being applied by central bankers.

Both China and India may attain 9% to 10% real GDP growth in 2010, according to many analysts, in different major banks, finance houses, the IMF and UN agencies, who hedge their bets by forecasting global economy growth as anywhere from below 2.5% to over 4.5% in 2010. This is a high-low difference in global output of around 1400 billion US dollars.

Underlying all forecasts of strong global recovery, interest rates are projected as likely to stay low, or extreme low, but with decreasing visibility from early 2010. (more)

Roach: Fed Should Tighten Now to Avoid Double Dip

The Federal Reserve should withdraw its massive stimulus soon, says Morgan Stanley Asia Chairman Steve Roach.

“There is never an easy time to do it,” he told Bloomberg.

“The longer they wait, the greater the chance they sow the seeds for the next bubble. So I’m in favor of an early exit strategy.”

The Fed has announced its intention to keep interest rates very low for some time.

“We’ve seen the most extraordinary monetary stimulus on record in the 15, 16 months post-Lehman Brothers’ (collapse),” Roach said. (more)

Fed Plan to Stop Buying Mortgages Feeds Recovery Wor

The Federal Reserve's pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the fragile housing recovery off course.
Home-mortgage rates have risen by about a quarter percentage point over the past month. Here, an unfinished home in Raleigh, N.C., in November.
Rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates, near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy.

The recent rise in mortgage rates could be a prelude to even bigger increases in coming months as the Fed steps away from support for the market. That prospect has some in the markets counting on the Fed to change course and keep buying past March, which many officials are reluctant to do.

When such a big investor stops buying, "that could lead to material increases in [interest] rates across the board," said Ronald Temple, portfolio manager at Lazard Asset Management. He sees mortgage rates rising by a percentage point when the Fed stops buying. A withdrawal of government support, combined with high unemployment and rising mortgage foreclosures, could push home prices down 20%, he said. (more)

Business Week - 18 January 2010

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Futures And Options Trader Magazines January 2010

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The Argentina Collapse

The topic is not a new one. When Argentina spiraled into social and economic collapse in the late 90’s life changed for everyone. Regardless of the causes, there is much to be learned from a country that was once prosperous and is now recovering from economic crises that put about 60% of the people into poverty.
A popular article in the survivalsphere entitled “Lessons from Argentina’s economic collapse” from Ferfal documents the struggles of living in a collapsing society.Download it here in pdf Argentina Collapse or simply read below. (more)

The Economist (January 9th - January 15th 2010)

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Duck Tales - Inflation Lesson